Weekly Currency Review: The Turkish Lira Stumbles Against The American Dollar

US-China Trade War

The U.S. increased tariffs from 10% to 25% on $200 billion worth of Chinese goods on the 10th of May. This came after trade talks in Washington the night before failed to produce an agreement to forestall the higher levies.

The USD/CNY moved haphazardly from 6.7934 to 6.8464, indicating an increase in preference to retain the American dollar. Perhaps the minute movements reflects a turnaround in sentiment, with investors previously expecting a deal to be announced between the two great nations to conclude the trade war.

Within this forecast I Know First successfully predicted the following pairs: EUR/RUB – 2.31%, USD/TRY – 3.99%, USD/SEK – 1.32%, USD/CNY – 1.36% and USD/ARS – 1.76%.

[Yahoo Finance]

Turkish Uncertainty

This year, the lira has lost almost 15 percent against the dollar. Increasing investor departure from Turkey over the past several months has been triggered by a market that is seen as too vulnerable to political intervention and one that also suffers from weak foreign currency reserves. Its political instability can be seen from the decision to re-run the mayoral election in Istanbul that had been narrowly won by the main opposition party.

The drop in value of the lira promptly demonstrates that sentiment as investors shifted from the lira to foreign currencies. To curb a depreciation in the lira, Turkey’s state banks, including the largest lender by assets Ziraat Bank, sold $1 billion and recovered overnight. Moving forward, investors can be wary of Turkey’s ability to recover in the future.

The USD/TRY has increased by 3.99%, as correctly predicted by I Know First.

[Yahoo Finance]

Meanwhile, investors in the EU are buying more US Treasury Bonds due to poorer interest yields offered by the European governments. The European Central Bank’s continued commitment to monetary easing has exacerbated the movement. By purchasing billions of euros of debt every month, the ECB has pushed bond yields across the eurozone lower, making the assets less appealing to investors. While the dollar remains strong, the kroner of the export-driven Sweden is not as strong to withstand the effect of the global market, which kept the USD/SEK up.

The USD/SEK has increased by 1.16%, as correctly predicted by I Know First.

[Yahoo Finance]

In accordance with the forecast, I Know First also successfully predicted: EUR/RUB – 2.31% and USD/ARS – 1.76%.

[Yahoo Finance]

[Yahoo Finance]

Algorithmic traders utilize these daily forecasts by the I Know First market prediction system as a tool to enhance portfolio performance, verify their own analysis and act on market opportunities faster. This forecast was sent to current I Know First subscribers.

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How to interpret this diagram

Algorithmic Currency Forecast: The table on the left is the forex forecast for the forex outlook produced by I Know First’s algorithm. Each day, subscribers receive forecasts for six different time horizons. Note that the top 54 currencies in the 1-month forecast may be different than those in the 1-year forecast. In the included table, only the relevant currencies have been included. The boxes are arranged according to their respective signal and predictability values (see below for detailed definitions). A green box represents a positive forecast, suggesting a long position, while a red represents a negative forecast, suggesting a short position.
Forecast Performance: The table on the right compares the actual currency performance with I Know First’s prediction. The column titled “Forecast” shows which direction the algorithm predicted, and the column “% Change” shows the actual currency’s performance over the indicated time period. The “Accuracy” column shows a “v” if the algorithm correctly predicted the direction of the stock or an “x” if the forecast was incorrect. The “I Know First Hit Ratio” represents the algorithm’s accuracy when predicting the trend of the currency.
Signal: This indicator represents the predicted movement direction/trend; not a percentage or specific target price. The signal strength indicates how much the current price deviates from what the system considers an equilibrium or “fair” price.
Predictability: This value is obtained by calculating the correlation between the current prediction and the actual asset movement for each discrete time period. The algorithm then averages the results of all the prediction points, while giving more weight to recent performance. As the machine keeps learning, the values of P generally increase.

Please note-for trading decisions use the most recent forecast. Get today’s forecast and Top stock picks.

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